US mulls further sanctions on Russia; all of which however look counter-productive

Jon Huntsman, the new ambassador to Russia who President Donald Trump has appointed, has downplayed the prospect of further sweeping sanctions against Russian companies and businesspeople being announced by the US on 29th January 2018.

Ambassador Huntsman instead says that only a report will be published on that day

The date when additional U.S. sanctions may be imposed on Russian individuals and companies has not been set, while January 29 is the date of publishing the ‘Kremlin report’, U.S. Ambassador to Russia Jon Huntsman told reporters on Tuesday.

The media has reported the possibility of new sanctions but all that has been happening so far is the implementation of the law, there is nothing new, Huntsman said.

The law Ambassador Huntsman is referring to is the new sanctions law voted by Congress in August and signed under protest by President Trump that month.

There has been much secrecy about this report, which the law specifies must be published by 29th January 2018. Latest reports say that a list is being drawn up of 300 businesspeople and companies who are to be placed on a new sanctions list.

As I have discussed previously, additional sanctions against individual Russian businesspeople and companies might cause serious problems for the businesspeople and companies concerned but they will have little or no impact on the Russian economy overall. On the contrary if they lead to more Russian businesspeople and companies keeping their money in Russia they will serve the Kremlin’s interests.

However there have been rumours that the US is considering more sweeping sanctions targeting not just individual businesspeople and companies but the entire Russian economy. Three sorts of such sanctions have been mentioned

(2) Freezing Russian gold and foreign currency reserves held in the US; and

(3) Prohibiting US investors from buying Russian sovereign debt.

What are the prospects of any of these sanctions being imposed?

The first thing to say is that all three of these sanctions would be exceptionally aggressive steps, which would send shockwaves across the international financial system. Countries like China which also have issues with the US – and which the US is now also threatening with sanctions in connection with the North Korean crisis – would almost certainly interpret such moves as a long term threat to themselves.

Implementing actions of this sort would over time only hasten moves by countries like China and Russia to set up alternative international financial institutions of their own. That would undermine the US led ‘globalisation’ of the international financial system. Since the US is the principal beneficiary of this system implementing these sort of sanctions would hardly be in the US’s own long term interests, which is of course precisely why such sanctions were not imposed on Russia at the peak of the Ukrainian crisis in 2014.

Assuming however that in the current hysterical atmosphere there really are proposals to impose these sanctions on Russia, what would their consequences be?

(1) Disconnecting Russian banks from SWIFT

The first point to make about this proposal is that the US does not have the power to impose it unilaterally. SWIFT is based in Brussels, not the US, and is regulated by EU law, not US law. The US government is not in a position simply to order that Russian banks be disconnected from SWIFT.

As it happens it is known that the Obama administration and the British government did actively lobby for Russian banks to be disconnected from SWIFT back in 2014. However they ran into a wall of opposition both from SWIFT itself and from European governments, with the German and Austrian governments especially strongly opposed.

There is no indication that such a proposal is being seriously debated at this time in European capitals, which makes it unlikely that it is being considered.

However assuming that it is being considered, what would its effect be?

US and British politicians who have lobbied for Russian banks to be disconnected from SWIFT seem to think this is some of ‘magic bullet’ or ‘nuclear option’ which would tip the whole Russian economy into crisis, but is this really so?

There is a huge amount of mystification about SWIFT. However ultimately it is nothing more than an electronic transfer system which banks use in order to transfer money between each other.

Banks could transfer money between each other before SWIFT appeared. I can remember a time not so long ago when most money transfers between banks did not use SWIFT.

The fact that SWIFT is an electronic transfer system means that it can be duplicated, and that is exactly what the Russians have reportedly done.

Back in 2014 the disconnection of Russian banks from SWIFT would indeed have been a heavy blow because Russian banks used SWIFT to transfer money between each other within Russia itself.

However the reports that the US and Britain were lobbying for Russian banks to be disconnected from SWIFT caused the Russian Central Bank to create its own alternative to SWIFT as a back up system.

Not only does this system apparently already exist, but it has apparently been field tested, though for the moment it is not in actual operation because of the continued availability of SWIFT.

Most probably most Russian banks and bank branches are not yet connected to this alternative system. However if Russian banks really were disconnected from SWIFT the alternative system would not only be rapidly brought into operation but priority would be given to extending it across the whole Russian banking system.

Doubtless there would be a period of disruption, but a country like Russia has the technological and administrative resources to solve that sort of problem, and I suspect doing so would take more than a few months.

Russian banks would of course still be prevented from making electronic transfers via SWIFT to Western banks. However the impact of this can be exaggerated.

Since 2014 the big state owned Russian banks which account for 70% of the Russian banking system and an even higher proportion of the foreign operations carried out by Russian banks have been effectively cut off from borrowing in Western financial markets. Their foreign based customers would no doubt suffer if they were disconnected from SWIFT , but it is unlikely the big state owned banks would themselves be seriously affected.

Which brings me back to the main objection to cutting off Russian banks from SWIFT. Many of the bank customers who would be most seriously affected are Western companies and businesspeople with investments in Russia.

With trade between Russia and Western European actually increasing over the last few months, many European businesspeople and companies would be very seriously affected.

Not only would that hurt them badly but some of these are influential people and companies who would be likely to complain. That of course is why the decision was taken back in 2014 not to disconnect Russian banks from SWIFT in the first place.

Overall disconnecting Russian banks from SWIFT looks neither like a magic bullet nor like something that European business would willingly accept. Frankly the political and financial costs of doing it look greater than any conceivable benefit.

(2) Freezing Russian gold and foreign currency reserves

Since this would be tantamount to seizing the sovereign property of the Russian state it would unquestionably be illegal and would as Russian officials have said be equivalent to an act of war. However US has officials shown an increasing willingness to take illegal actions and it is unlikely that the fact that this step is illegal would be enough in itself to deter them.

If the US did take this step what would its economic impact be?

Russia does keep some of its foreign currency reserves in the US with the IMF, but it is not clear how great the amount is and claims that it is much as a third of the reserves is probably an overstatement.

There is no doubt that such a step would have a serious impact, causing the value of the rouble to fall, at least for a short time.

However Russia runs a trade surplus and has paid off most of its foreign debt and the Central Bank since 2014 has been letting the rouble float.

The economy would swiftly adjust as it did to the crisis of 2014, with the Russian trade surplus growing still further as Russia’s trade position benefitted from the rouble’s fall and from the surge in oil prices which would be likely follow such a measure.

Doubtless inflation in Russia would be higher, though it would be unlikely to go as high as it did during the inflation spike of 2015. However the political impact of the increase in inflation within Russia would be mitigated with the Russian government in a position to blame the US for causing it. Besides as happened following the inflation spike of 2015, once the economy adjusted inflation would fall back again.

If freezing the Russian state’s foreign currency reserves in the US would only have a short term impact on the Russian economy, it would nonetheless constitute a colossal shock across the world financial system.

It would show that the US is prepared to abuse its position at the core of the world finance system and as the host of institutions such as the IMF to target not just the financial reserves of the smaller economies such as Libya, Venezuela or Iran but also the reserves of big G20 economies such as Russia.

The Chinese especially – who have been on the receiving end of similar threats against their reserves for some time – would be horrified.

It would be difficult to imagine any step the US might take that would galvanise more countries like China and Russia to set up their own alternatives to the world financial system and its institutions which have historically been under the control of the US. Such moves are already underway and following the freezing (ie. seizure) of whatever proportion of Russia’s reserves are on US territory that process would be bound to accelerate.

It is impossible to see how that would benefit the US.

(3) Prohibiting US investors from buying Russian sovereign debt

In my opinion this is by far the most likely of any further sectoral sanctions the US might introduce. It is the one further sectoral sanction the Democratic Senators who published the recent report about Russia which I discussed in a recent article have actually recommended it.

The U.S. Treasury Department is required to report in early 2018 on the possible effects on Russia’s economy of sanctions on sovereign debt, which could have the potential to foreclose external sources of funds. While the head of Russia’s central bank believes that ‘‘there won’t be any seriously negative consequences’’ from such sanctions, economists have warned that such sanctions ‘‘may totally stop other foreign investors, not the U.S. investors only, from buying the new government debt, fiercely pushing up borrowing costs for Russia.”

This sanction would also almost certainly be illegal but as I have said in my previous discussion of the proposals to freeze whatever foreign currency reserves the Russian state has located on US territory (see (2) above) that no longer seems to be a significant constraint on US actions.

It would however only be a limited sanction. The US cannot prevent Russia from floating bonds in the international money markets – in Asia if not in Europe – and the Democratic Senators’ assumption that prohibiting US investors from buying such bonds will dissuade other international investors from doing so is also almost certainly wrong (the cited authority for the claim are not ‘economists’ but two articles in Bloomberg Markets).

The problem anyway is that with Russia now expected to run a budget surplus next year, and with Russia’s trading position also in healthy surplus, and with Russia’s gold and foreign currency reserves now standing at more than $430 billion and growing, it is not obvious that Russia needs to borrow at all.

Unless this measure is combined with a freezing of Russian gold and foreign currency reserves, it is difficult to see how this could be more than a pinprick, just as the Democratic Senators report Russian Central Bank Chair Nabiullina having said.

However if the US were to freeze Russian gold and foreign currency reserves this step would not be necessary anyway, since US investors would not want to buy Russian foreign debt in those circumstances if the Russian reserves were frozen.

At that point of course the US would be facing all the consequences outlined in (2).

Needless to say, if US investors were prohibited from buying Russian debt but no action was taken against Russia’s reserves, then the US would simply be forcing its own investors to forego an opportunity to make money by buying into a strong financial asset which was being bought by other international investors elsewhere. Again it is not obvious how this would benefit the US.\

Summary

What all these proposals have in common is that they highlight is the simple fact that the sectoral sanctions which were imposed by the West on Russia in 2014 have failed.

The sanctions did not break the Russian economy, or cause a popular revolution in Russia, or lead to an oligarchs’ coup against Putin – all things their advocates variously predicted would happen because of them.

Nor have they achieved their stated purpose, which is to force Russia to change its policies towards Ukraine. Even the Democratic Senators in their recent report very grudgingly admit as much

Sanctions Pressure Has Been Insufficient: U.S. and EU sanctions have not resulted in the implementation of the Minsk Agreements nor the return of Crimea to Ukrainian control. The Russian government appears to have been able to resist this pressure because the cost imposed by sanctions has been manageable.

The trouble is that faced with this simple fact the advocates in the US and elsewhere of more confrontation with Russia refuse to learn the lesson that sanctions against Russia do not work.

Instead they demand more and more sanctions of a sort which were rejected in 2014 when the original sanctions were imposed precisely because they the sort of sanctions that over the long term are more likely to cause harm to the US and the West than they are to Russia.

The key point is that the Russian economy is many orders of magnitude bigger and more sophisticated than the sort of economies – such as those of Cuba, Iran, Iraq, Libya, North Korea and Venezuela – upon which the US has imposed sanctions previously. Applying the supposed lessons of the impact of sanctions on those economies in the case of Russia makes no sense, even if those lessons had been learnt correctly, which they have not. Unlike all those economies Russia’s economy is far bigger, already possessing the technology, capital and resources it needs to develop autonomously.

As a self-sufficient continental economy sanctions on Russia almost by definition can have only a limited impact, and one which over time must diminish anyway.

As it happens the most effective sanctions the West could have imposed on Russia, both in terms of their impact on the Russian economy and their limited impact on the economies of the West, were the sectoral sanctions which were imposed in 2014.

Those sanctions did stop for a time the flow of capital from the West into Russia at a time when Russia was facing heavy debt repayments and when the price of its main export products – oil and gas – was collapsing. The result was to deepen the recession caused by the collapse of oil and gas prices whilst further lowering the value of the rouble in a way which intensified the inflation spike.

With oil prices now rising, most short term Russian foreign debt repaid, and with the rouble floating, none of the sanctions discussed in this article look like they can have anything like the impact on Russia that the sanctions imposed in 2014 did.

The fact that the Russian economy successfully – in fact almost effortlessly – adjusted to those sanctions despite the difficult conditions ought to serve as a warning that further sanctions against Russia will not work, and if they are of the sort discussed in this article are counter-productive.

Jon Huntsman’s comments may suggest that there are people in the US who understand this, and that the demands of those who want ever more confrontation on this occasion are unlikely to be followed.

However the lesson of the last few decades is that to expect rational decision making in Washington especially on the subject of Russia is to expect altogether too much.

One way or the other the next few weeks will show the direction decisions in Washington are taking.

Forget the All-Blacks ‘Haka’, ignore Foreman-Frasier, Drago-Balboa, and Ortiz-Liddell, the honor of the greatest (or perhaps most awkward) staredown in history now goes to US Vice President Mike Pence…

Having been blamed for everything from Trump’s election victory to USA soccer team’s loss to England last week, Russia faced accusations all weekend and was reportedly confronted by the US contingent over “meddling.”

As The Sun reports,Pence and Putin “discussed the upcoming G20 Summit and touched on the issues that will be discussed when President Trump and President Putin are both in Argentina for the summit,” according to the vice president’s press secretary, Alyssa Farah.

An NBC reporter tweeted: “New per the @VP’s Office—> The VP’s office says Vice President Pence directly addressed Russian meddling in the 2016 election in a conversation with Vladimir Putin on Thursday in Singapore.

“The conversation took place following the plenary session this afternoon at ASEAN.”

But, it was the following clash of the titans that caught most people’s attention.

As the Russian president joined the that Pence shook Putin’s ‘deadly’ hand, met his ‘steely KGB-trained’ gaze, and desperately tried not to smile or blink for 20 seconds as Putin appeared to chat amicably with the US VP…

While Putin has (if his accusers are to be believed) grappled his opponents to death with his bare hands (remember he is a sinister KGB agent and jiu-jitsu expert); we suspect the only thing VP Pence has gripped tightly in his hands is his bible.

Sadly, John Bolton then blew the tough guy act (or is he Mike Pence’s ‘good cop’) as he does his best impression of a teenage girl meeting their popstar idol for the first time…

This move was strongly condemned by the authorities of the Russian Orthodox Church, which has the only canonically accepted church presence in Ukraine, a situation that the Ecumenical Patriarch himself agreed with only a few years ago.

Russia moved to break communion with the Ecumenical Patriarchate, creating a split in the Orthodox Church, but a split that at first risked Russia standing alone in their statement of disapproval of the Ecumenical Patriarchate’s actions.

For a time the reaction of the other “local” Orthodox Churches was cautious, with the vast majority (excepting only the Greek Church in the USA) coming out in support of the canonical group in Ukraine, but without taking similar action to Moscow.

That appears to be changing.

On November 12 and 16, respectively, the Churches of Serbia and Poland issued strong statements. They both categorically refused to recognize the Ukrainian schismatic groups and they forbade their clergy to concelebrate with the “clergy” within these groups. The Serbs’ statement on this was as follows:

“The Assembly does not recognize the mentioned figures and their followers as Orthodox bishops and clergy and, consequently, does not accept liturgical and canonical communion with them and their supporters.”

“The Holy Bishops’ Council forbids the priests of the Polish Orthodox Church from having liturgical and prayerful contact with the ‘clergy’ of the so-called Kiev Patriarchate and the so-called ‘Autocephalous Orthodox Church,’ which have committed much evil in the past,” the statement reads.

According to the Polish hierarchs, persons deprived of episcopal and clerical ordination cannot be leaders in establishing peace in the Ukrainian Orthodox Church.

“Only the observance of the dogmatic and canonical norms of the Church and the preservation of the centuries-old tradition will protect Orthodoxy from severe ecclesiastical consequences on an international scale. The Polish Orthodox Church prays fervently for the unity of the holy Orthodox Church and for peace for the Ukrainian Orthodox Church,” the message further reads.

And while yet officially under the omophorion of Constantinople, several Greek monasteries on Mount Athos, the Orthodox monastic republic that is the spiritual center of all of Eastern Orthodoxy, inserted special petitions in their services to pray for Metropolitan Onufry and the people of the Ukrainian Orthodox Church – that is, the canonical group that is a highly autonomous, or independent, Church while yet under the Moscow Patriarchate.

This is an interesting situation because in terms of ecclesial jurisdiction, Mount Athos is actually under the Ecumenical Patriarchate. However, the monasteries there often are known for taking the hardest of hardline stances when even their own Patriarchate takes actions they feel to be wrong:

Thousands of Russian and Ukrainian Orthodox Christians go on pilgrimage to Mt. Athos, which is under the jurisdiction of Constantinople, every year. However, the Russian Church, of which the Ukrainian Church is an autonomous, self-governing part, broke communion with Constantinople on October 15, which the Ukrainian Church confirmed yesterday, due to unilateral Constantinople’s interference in ecclesiastical life in Ukraine.

“We know that the majority of the abbots of the Athonite monasteries do not agree with the anti-canonical decisions of the Phanar,” Met. Anthony said.

“In several monasteries—Greek ones, by the way—they have included a special petition in the Litany of Peace in the morning and evening services: ‘For His Beatitude Metropolitan Onuphry with his suffering flock.,’” he explained, adding, “We are very grateful to the Athonites for their brotherly love and prayers.”

This is a story that it still developing, but the recent moves by Poland and Serbia may be outlining the path that other local Orthodox Churches will take.

That move is to deny recognition to the schismatics that Patriarch Bartholomew lifted the anathemas and depositions for. If this step were to be taken by all the local Churches that have expressed support for the canonical Ukrainian Church, the result would be not much different than where the schismatics were on October 10th:

Filaret Denisenko’s group and Makary’s group would indeed have communion with Constantinople, and presumably the Greek Orthodox Church in the USA, but with no one else.

This move would be a severe repudiation of the Ecumenical Patriarch’s repeated declaration that he has the sole authority to grant autocephaly to anyone anywhere in the Orthodox world (or even to take it away), which is a canonical absurdity.

Given the substantial problems that Filaret Denisenko continues to create, such as refusing to be considered only a Metropolitan (this was the Ecumenical Patriarchate’s order), and to still consider himself a patriarch, blessing a blasphemous “icon” that is really just a monument to Ukrainian ultra-nationalism and secularism (note the neo-Nazi wolfsangel and machine guns in the upper right of this photo:

And given the ideations of Patriarch Bartholomew himself, who is also recently reported to be pushing towards creating unity with the Roman Catholic Church, while acting like a pope himself by insisting that all the local Orthodox Churches will accept his decisions, it does not look like this situation is going to go away by itself.

However, by placing the problem of the schismatics squarely in Patriarch Bartholomew’s hands (since he created the problem), the pressure created by other churches refusing to concelebrate with the Ukrainian schismatics may be enough to isolate the Ecumenical Patriarchate itself, rather than fulfilling the highly likely goal that the US, Ukraine and Patriarch Bartholomew may have had initially – to isolate Russia and create a situation where Russia is made to look like the bad guy, once again.

Was $25 million in American tax dollars allocated for a payoff to stir up religious turmoil and violence in Ukraine? Did Ukrainian President Petro Poroshenko (unsuccessfully) attempt to divert most of it into his own pocket?

Last month the worldwide Orthodox Christian communion was plunged into crisis by the decision of Ecumenical Patriarch Bartholomew I in Constantinople to recognize as legitimate schismatic pseudo-bishops anathematized by the canonical Ukrainian Orthodox Church, which is an autonomous part of the Russian Orthodox Church. In so doing not only has Patriarch Bartholomew besmirched the global witness of Orthodoxy’s two-millennia old Apostolic faith, he has set the stage for religious strife in Ukraine and fratricidal violence – which hasalready begun.

No one – and certainly not this analyst – would accuse Patriarch Bartholomew, most Ukrainian politicians, or even the Ukrainian schismatics of sympathizing with advocacy of such anti-Orthodox values. And yet these advocates know they cannot advance their goals if the conciliar and traditional structure of Orthodoxy remains intact. Thus they welcome efforts by Constantinople to centralize power while throwing the Church into discord, especially the Russian Church, which is vilified in some Western circles precisely because it is a global beacon of traditional Christian moral witness.

This aspect points to another reason for Western governments to support Ukrainian autocephaly as a spiritual offensive against Russia and Orthodoxy. The post-Maidan leadership harp on the “European choice” the people of Ukraine supposedly made in 2014, but they soft-pedal the accompanying moral baggage the West demands, symbolized by “gay” marches organized over Christian objections in Orthodox cities like Athens, Belgrade, Bucharest, Kiev, Odessa, Podgorica, Sofia, and Tbilisi. Even under the Trump administration, the US is in lockstep with our European Union friends in pressuring countries liberated from communism to adopt such nihilistic “democratic, European values.”

Perhaps even more important to its initiators, the row over Ukraine aims to break what they see as the “soft power” of the Russian Federation, of which the Orthodox Church is the spiritual heart and soul. As explained by Valeria Z. Nollan, professor emerita of Russian Studies at Rhodes College:

‘The real goal of the quest for autocephaly [i.e., complete self-governing status independent of the Moscow Patriarchate] of the Ukrainian Orthodox Church is a de facto coup: a political coup already took place in 2014, poisoning the relations between western Ukraine and Russia, and thus another type of coup – a religious one – similarly seeks to undermine the canonical relationship between the Ukrainian Orthodox Church and Moscow.’

In furthering these twin objectives (morally, the degrading of Orthodox Christianity; politically, undermining the Russian state as Orthodoxy’s powerful traditional protector) it is increasingly clear that the United States government – and specifically the Department of State – has become a hands-on fomenter of conflict. After a short period of appropriately declaring that “any decision on autocephaly is an internal [Orthodox] church matter,” the Department within days reversed its position and issued a formal statement (in the name of Department spokesperson Heather Nauert, but clearly drafted by the European bureau) that skirted a direct call for autocephaly but gave the unmistakable impression of such backing. This is exactly how it was reported in the media, for example, “US backs Ukrainian Church bid for autocephaly.” Finally, Secretary of State Mike Pompeo weighed in personally with his own endorsement as did the US Reichskommissar for Ukraine, Kurt Volker.

The Threat…

There soon became reason to believe that the State Department’s involvement was not limited to exhortations. As reported by this analyst in October, according to an unconfirmed report originating with the members of the Russian Orthodox Church Outside of Russia (an autonomous New York-based jurisdiction of the Moscow Patriarchate), in July of this year State Department officials (possibly including Secretary Pompeo personally) warned the Greek Orthodox Archdiocese of America (also based in New York but part of the Ecumenical Patriarchate) that the US government was aware of the misappropriation of a large amount of money, about $10 million, from estimated $37 million raised from believers for the construction of the St. Nicholas Greek Orthodox Church and National Shrine in New York. The State Department warning also reportedly noted that federal prosecutors have documentary evidence confirming the withdrawal of these funds abroad on the orders of Ecumenical Patriarch Bartholomew. It was suggested that Secretary Pompeo would “close his eyes” to this theft in exchange for movement by the Patriarchate of Constantinople in favor of Ukrainian autocephaly, which helped set Patriarch Bartholomew on his current course.

[Further details on the St. Nicholas scandal are available here, but in summary: Only one place of worship of any faith was destroyed in the September 11, 2001, attack in New York and only one building not part of the World Trade Center complex was completely destroyed. That was St. Nicholas Greek Orthodox Church, a small urban parish church established at the end of World War I and dedicated to St. Nicholas the Wonderworker, who is very popular with Greeks as the patron of sailors. In the aftermath of the 9/11 attack, and following a lengthy legal battle with the Port Authority, which opposed rebuilding the church, in 2011 the Greek Archdiocese launched an extensive campaign to raise funds for a brilliant innovative design by the renowned Spanish architect Santiago Calatrava based on traditional Byzantine forms. Wealthy donors and those of modest means alike enthusiastically contributed millions to the effort. Then – poof! In December 2017, suddenly all construction was halted for lack of funds and remains stalled to this day. Resumption would require having an estimated $2 million on hand. Despite the Archdiocese’s calling in a major accounting firm to conduct an audit, there’s been no clear answer to what happened to the money. Both the US Attorney and New York state authorities are investigating.]

This is where things get back to Ukraine. If the State Department wanted to find the right button to push to spur Patriarch Bartholomew to move on the question of autocephaly, the Greek Archdiocese in the US is it. Let’s keep in mind that in his home country, Turkey, Patriarch Bartholomew has virtually no local flock – only a few hundred mostly elderly Greeks left huddled in Istanbul’s Phanar district. (Sometimes the Patriarchate is referred to simply as “the Phanar,” much as “the Vatican” is shorthand for the Roman Catholic papacy.) Whatever funds the Patriarchate derives from other sources (the Greek government, the Roman Catholic Church, the World Council of Churches), the Phanar’s financial lifeline is the ethnic Greek community (including this analyst) in what is still quaintly called the “Diaspora” in places like America, Australia, and New Zealand. And of these, the biggest cash cow is the Greek-Americans.

That’s why, when Patriarch Bartholomew issued a call in 2016 for what was billed as an Orthodox “Eighth Ecumenical Council” (the first one since the year 787!), the funds largely came from America, to the tune of up to $8 million according to the same confidential source as will be noted below. Intended by some as a modernizing Orthodox “Vatican II,” the event was doomed to failure by a boycott organized by Moscow over what the latter saw as Patriarch Bartholomew’s adopting papal or even imperial prerogatives – now sadly coming to bear in Ukraine.

…and the Payoff

On top of the foregoing, it now appears that the State Department’s direct hand in this sordid business may not have consisted solely of wielding the “stick” of legal threat: there’s reason to believe there was a “carrot” too. It very recently came to the attention of this analyst, via an unsolicited, confidential source in the Greek Archdiocese in New York, that a payment of $25 million in US government money was made to Constantinople to encourage Patriarch Bartholomew to move forward on Ukraine.

The source for this confidential report was unaware of earlier media reports that the same figure – $25 million – was paid by Ukrainian President Petro Poroshenko to the Phanar as an incentive for Patriarch Bartholomew to move forward on creating an independent Ukrainian church. Moreover, Poroshenko evidently tried to shortchange the payment:

‘Peter [Petro] Poroshenko — the president of Ukraine — was obligated to return $15 million US dollars to the Patriarch of Constantinople, which he had appropriated for himself.

‘As reported by Izvestia, this occurred after the story about Bartholomew’s bribe and a “vanishing” large sum designated for the creation of a Unified Local Orthodox Church in Ukraine surfaced in the mass media.

‘As reported, on the eve of Poroshenko’s visit in Istanbul, a few wealthy people of Ukraine “chipped in” in order to hasten the process of creating a Unified Local Orthodox Church. About $25 million was collected. They were supposed to go to the award ceremony for Patriarch Bartholomew of Constantinople for the issuing of a tomos of autocephaly. [A tomos is a small book containing a formal announcement.] However, in the words of people close to the backer, during the visit on April 9, Poroshenko handed over only $10 million.

‘As a result, having learned of the deal, Bartholomew cancelled the participation of the delegation of the Phanar – the residence of the Patriarch of Constantinople, in the celebration of the 1030th anniversary of the Baptism of Russia on July 27 in Kiev.

‘”Such a decision from Bartholomew’s side was nothing other than a strong ultimatum to Poroshenko to return the stolen money. Of course, in order to not lose his face in light of the stark revelations of the creation of the tomos of autocephaly for the Ukrainian Orthodox Church, Peter Alexeevich [Poroshenko] had to just return those $15 million for the needs of Constantinople,” a trusted source explained to reporters.

‘For preliminary information, only after receiving the remaining sum, did Bartholomew finally give his consent to sending a delegation of the Phanar to Kiev … ‘

Now, it’s possible that the two identical figures of $25 million refer to two different pots of money (a cool $50 million!) but that seems unlikely. It’s more probable the reports refer to the same sum as viewed from the sending side (the State Department, the Greek Archdiocese) and the delivery side (Poroshenko, Constantinople).

Lending credibility to the confidential information from New York and pointing to the probability that it refers to the same payment that Poroshenko reportedly sought to raid for himself are the following observations:

When Poroshenko generously offered Patriarch Bartholomew $10 million, the latter was aware that the full amount was $25 million and demanded the $15 million Poroshenko had held back. How did the Patriarch know that, unless he was informed via New York of the full sum?

If the earlier-reported $25 million was really collected from “a few wealthy people of Ukraine” who “chipped in,” given the cutthroat nature of disputes among Ukrainian oligarchs would Poroshenko (an oligarch in his own right) have risked trying to shortchange the payment? Why has not even one such Ukrainian donor been identified?

Without going into all the details, the Phanar and the Greek Archdiocese have a long relationship with US administrations of both parties going back at least to the Truman administration, encompassing some decidedly unattractive episodes. In such a history, a mere bribe for a geopolitical shot against Moscow would hardly be a first instance or the worst.

As one of this analyst’s Greek-American connections puts it: “It’s easy to comprehend the Patriarchate bowing to the pressure of State Dept. blackmail… not overly savory, but understandable. However, it’s another thing altogether if Kiev truly “purchased” their autocephalous status from an all too willing Patriarchate … which would relegate the Patriarch to ‘salesman’ status and leave the faithful wondering what else might be offered to the highest bidder the next time it became convenient to hold a Patriarchal ‘fire sale’ at the Phanar?!”

Finally, it seems that, for the time being at least, Constantinople doesn’t intend to create an independent Ukrainian church but rather an autonomous church under its own authority. It’s unclear whether or not Poroshenko or the State Department, in such event, would believe they had gotten their money’s worth. Perhaps they would. After all, the issue here is less what is appropriate for Ukraine than what strikes at Russia and injures the worldwide Christian witness of the Orthodox Church. To that end, it doesn’t matter whether the new illegal body is Constantinopolitan or Kievan, just so long as it isn’t a “Moskal church” linked to Russia.